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Financing Your Business

Got That Kabbage Line of Credit? Here’s How to Use It Effectively

Last Updated on May 23, 2017

Eric Goldschein is a staff writer at Fundera. He covers entrepreneurship, small business trends, finance, and marketing. He was previously the managing editor of SportsGrid.com, and has written for Business Insider, the Huffington Post and more.

If you’re looking for an infusion of cash for your small business, and you need it fast, there are few more expedient options than Kabbage’s line of credit.

As we discussed in part one and two of our series on working with Kabbage, the online finance company has one of the quickest qualification processes we’ve ever seen. You can apply for a line of credit, up to $150,000, and go through a nearly instantaneous underwriting process a few minutes later. Then you’re ready to draw money from your line and deposit it in your business checking or PayPal account. It’s as simple as that.

Here’s a rundown of what happens after Kabbage approves a small business owner for a line of credit, how they can utilize their new source of funding, and the terms for each withdrawal, including how to repay Kabbage and/or start a new draw.

Step 1: Get Funds Now

Once you link your business accounts— such as a checking account, payment service like Square, or selling platform like Etsy—to your Kabbage application (revisit part 2 for a more in-depth explanation of what you can link to Kabbage, including social media accounts), an automatic review takes place that analyzes your transactions and determines the parameters of your line of credit.

After you consent to a credit check, you’ll know how much funding you can access. Then, you can go about the process of setting up your first draw by hitting the “Get Cash Now” button.

Step 2: Withdraw And Learn Your Payment Schedule

You can withdraw from your line of credit once every 24 hours, if you so choose. You can start withdrawing as soon as you’re approved, and choose between receiving your funds in a couple of days (if you want to send the money through your checking account) or instantly (if you link your PayPal account).

Kabbage’s “How much cash do you want today?” page has the following prompts and information:

Choose your draw amount: There’s a pulldown menu that gives you a variety of draw amount options (such as a flat $10,000) or you can enter the exact amount you need.

Choose where to transfer funds: As mentioned above, you have a couple of options here, with linking your PayPal account being the absolute fastest.

Payment schedule: Depending on how much you want to draw, Kabbage then lays out what your payment schedule will look like. All loans are repaid on a six or twelve month schedule, with a 1-10% fee (depending on your terms). So each month you’ll pay back 1/6 or 1/12 of your principal, plus a fee.

Note: When you return to this page to make another draw, your available funds and outstanding payments will be noted at the top of the screen.

Then you click “Get Cash.” You’ll accept the loan terms, input your bank account routing information, and prepare to get cash with a “Your cash is on the way!” confirmation.

At this point, you’re officially on the books with Kabbage. If you return to the Dashboard page, you’ll see your current available cash as well as your outstanding balance, among other information and options.

Step 3: Repay Your Loans

Head to the “My Loans” page to check up on your repayment schedule, which has your minimum monthly payments and a countdown to the next payment due date.

You can choose pay off your monthly minimum, the entire amount you owe, or another amount. (Note that you can repay your loan early at any time and avoid additional fees.) Select your payment method—for example, a transfer from your bank account—and hit submit. Your outstanding balance on the dashboard will be instantly updated.

Step 4 (optional): Continue to link business accounts

Linking business accounts to your Kabbage account can help you get increases in your line of credit limit, as well as better terms. If you remember that you also sell products on Amazon, or started using Intuit QuickBooks to track transactions, link them up as well at any time.

Step 5: Use your new cash!

This part is the most fun. Start using your new access to funds for any of your typical business expenses, such as expanding your location, making improvements to infrastructure, investing in a good deal on inventory, starting a new digital marketing campaign, hiring new employees to meet seasonal demand, and much more. The choice is yours.

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That’s the end of the Kabbage line of credit qualification and funding process. You may not find a more simple and quicker way to get an injection of sorely needed funds than this one, but go over the terms of your offer to make sure the overall cost of funds right for you—the price of immediacy can be higher than what you might pay at other lenders. And as always, borrow responsibly. If you’re interested in learning more about the Kabbage process, check out more Kabbage reviews.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those
of the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

Eric Goldschein is a staff writer at Fundera. He covers entrepreneurship, small business trends, finance, and marketing. He was previously the managing editor of SportsGrid.com, and has written for Business Insider, the Huffington Post and more.